Supply Side Impacts
An assessment of most-used products and their related carbon emissions is providing an important baseline for educating Michigan State University’s internal purchasing managers—and determining what can be done to source products closer to home.
By Karla Hignite
In March 2010, Michigan State University, East Lansing, engaged research firm Trucost Inc. to help the institution measure and assess the carbon emissions of its supply chain. The analysis—a first of its kind for higher education institutions—focused on MSU’s 50 largest suppliers of goods and services by spend, which represent about half of MSU’s total purchasing expenditures. The study also assessed the top 100 products bought through the university’s food services—“all the way down to our pineapples, eggs, and bananas,” says Kathryn Lindahl, MSU’s assistant vice president for finance and operations.
In the pilot project’s first step, Trucost allocated emissions relative to the dollar amount MSU spends on each of the companies and products studied. This initial assessment was based on the company’s understanding of each supplier company’s footprint, informed by its current database of more than 4,500 companies. The assessment, completed in May, revealed that total emissions associated with these suppliers and products exceeded the equivalent of 121,000 metric tons of carbon. In comparison, total MSU emissions for calendar year 2009 were projected at 560,000 metric tons. (To read more about the ways higher education institutions can assign costs to their various carbon outputs, read “Keep Carbon Futures Fluid,” in the October 2010 issue of Business Officer.)
Overall, MSU’s top 10 carbon-contributing companies account for nearly 83 percent of the carbon in the segment studied and a little more than half (56 percent) of the total expenditure analyzed. The biggest industry contributors are mining, quarrying, and oil and gas extraction (which, combined, totaled 61.6 percent) and construction (which accounts for 27.1 percent). Combined, these two sectors represent nearly 88 percent of the carbon identified in the analysis.
That was no surprise to Lindahl. “This doesn’t mean we would or even could get rid of our coal-fired plant tomorrow,” says Lindahl. Neither does she foresee the university putting a moratorium on new construction or renovation. “What this does suggest is that we should consider how to diversify our energy supply and enhance the use of our facility space,” admits Lindahl.
To get a clearer picture of its supply chain “hot spots,” MSU requested a secondary report excluding coal and construction. With these sectors removed, technology surfaced as MSU’s third-largest carbon-intensive supplier segment. Meanwhile, analysis of MSU’s top 100 food products revealed their impact on MSU’s supplier footprint, contributing 10,400 metric tons of carbon and accounting for 9.3 percent of the impact of the supply segment studied. While the university has upped its share of local food purchases in recent years, Lindahl acknowledges the impossibility of going totally local based on MSU’s volume of 50,000 meals served daily. She does, however, believe the assessment provides an important baseline for educating internal purchasing managers and determining what more can be done to source products closer to home.
With the initial assessment concluded, the second step is under way. Lindahl recently sent letters to all vendors included in the initial review, requesting their participation in an electronic survey and encouraging them to use Trucost’s online platform to provide data on their emissions, energy and natural resource use, and operations and products. The information will allow for a refined assessment of MSU’s supply chain emissions, using available data provided by leaders of the supplier companies themselves. Trucost will then provide detailed reports to each of the participating suppliers that highlight their carbon footprint, pinpointing areas of greatest environmental impact along with recommended actions they can take to further reduce their greenhouse gas emissions.
MSU can likewise use the data to inform its own carbon-reduction strategies, says James Salo, Trucost’s vice president of strategy and research. “The reports provide data about the environmental impacts associated with each supplier and sector, thereby identifying carbon-intensive areas in MSU’s supply chain where it may be desirable to lower the university’s spend, switch to more efficient providers, or educate and support suppliers to take proactive measures to reduce their emissions.”
Lindahl agrees. “This process has the potential to take discussion and engagement with our partners to a new level.” For instance, the opportunity for MSU to follow up with supplier companies and to find ways to reduce waste streams in connection with university operations could lead to increased efficiencies and lower costs for suppliers and for the institution, notes Lindahl. “You begin to see the impacts of your supply chain in layers that pinpoint the activities that contribute most to your institution’s footprint, whether or not you are directly liable for those emissions.”
And, asserts Salo, by actively educating its business partners in this manner, MSU leaders publicly demonstrate the institution’s environmental commitments to staff, faculty, students, and alumni.
KARLA HIGNITE, University City, Texas, is a contributing editor for Business Officer.